Timing the market

[Bushiman]

Always the advice is that trying to time the market is a fool's game, but with all the news about a global recession/market correction highly likely in the next year or so...

I just opened up JR NISA accounts for my kids and I'm wondering whether it's best to drip feed the accounts around ¥3man a month till stock prices plummet then put the rest of their savings in in one lump. Or, just bite the bullet and put all their saving in now, expect to see a huge hit, then wait/pray for the bounce back...

What do you guys think?

[Beaglehound]

Personally I would always drip feed, that way you feel better if there is a major correction and if assets rise you are still winning. Depending on the amount of their savings you might drip feed more than 3man a month though.

[RetireJapan]

Always the advice is that trying to time the market is a fool's game, but with all the news about a global recession/market correction highly likely in the next year or so...

I just opened up JR NISA accounts for my kids and I'm wondering whether it's best to drip feed the accounts around ¥3man a month till stock prices plummet then put the rest of their savings in in one lump. Or, just bite the bullet and put all their saving in now, expect to see a huge hit, then wait/pray for the bounce back...

What do you guys think?

I started thinking about big falls in the market about three years ago... so there you go. I think timing the market is basically impossible, so why torture yourself trying?

[adamu]

Just put it all in and forget about it. It'll work out fine in the long run.

[KyushuWoozy]

I sold 100% of my shares about 3 weeks ago and put them into an account earning basically zero interest. All the talk of trade wars and recession freaked me out and I don't think a no-deal Brexit will help. However have to admit I'm usually hopeless at predicting this stuff. Time will tell.

[Bushiman]

Just put it all in and forget about it. It'll work out fine in the long run.

I started thinking about big falls in the market about three years ago... so there you go. I think timing the market is basically impossible, so why torture yourself trying?

Sound advice guys...
Thank you!

[adamu]

I sold 100% of my shares about 3 weeks ago and put them into an account earning basically zero interest. All the talk of trade wars and recession freaked me out and I don't think a no-deal Brexit will help. However have to admit I'm usually hopeless at predicting this stuff. Time will tell.

I can't predict the future, you could be right. But maybe this article will be helpful?

https://jlcollinsnh.com/2012/04/15/stoc ... -save-you/

Your behaviour is exactly the worst way to get good performance when using the long-haul strategy. If the market goes up after you've sold your stake, you'll miss out on any of the returns. And in the worst, case, when you finally give up and get back in, it could drop. It's really not worth trying to time it. Maybe you'd be better using this as an indication of your risk tolerance, and allocating more of your shares into bonds? I think the number one requirement when investing in index funds is to not sell in a panic. By definition, you're then not getting the market return anymore.

[Beaglehound]

It’s an interesting article Adamu. I know someone who sold all their shares in the middle of the 2008 carnage, which was precisely the wrong thing to do of course. I knew this and held on, but was anything but comfortable watching notional values tank day after day. I realised my risk tolerance was not high and when the market recovered moved more cash into multi asset funds. Which was likely the wrong thing to do from an investment point of view but gave me more peace of mind and still decent returns.

Another interesting thing is the premise that markets always go up in the long run. It may be true of the US but if you had invested in Japan in, say, 1990, what return would you have got over a 20 year period. Maybe dividends would overcome the overall fall in the indices, I don’t know but to someone risk averse like me it does give you pause.

[RetireJapan]

Another interesting thing is the premise that markets always go up in the long run. It may be true of the US but if you had invested in Japan in, say, 1990, what return would you have got over a 20 year period. Maybe dividends would overcome the overall fall in the indices, I don’t know but to someone risk averse like me it does give you pause.

This comes up a lot. If someone had bought the Japanese stock market at the peak of the bubble, then held to today, they would have done terribly of course.

However, if they had continued buying into the J-stock market through the fall and until now they would have done much better.

And if they had held a diversified global portfolio they would have been fine.


So I think the lesson of the Japanese bubble is to diversify and to invest regularly to smooth out the ride.

[KyushuWoozy]

I can't predict the future

Yes, in the end none of us know. However I think the main thing, as has been mentioned, is not to sell in a panic when the market is already crashing. That's the worst thing to do. I sold mine when market still high. I just figured, for a number of reasons, that what I have to gain over the next few months if the market continues rising at an average rate is less than I stand to lose if there's a big crash. Each of us has their own investment strategy. Good luck to us all.